Dismissal vs Notice of Termination - What is the Difference?

Dismissal and termination are two different ways in which an employment relationship can be concluded. It is important to understand the legal and practical differences between these, both for employers and employees.

What is dismissal?

A dismissal entails that the employment relationship is terminated immediately when the decision is communicated to the employee. Dismissal is a severe reaction that can only be used if the employee has committed a gross breach of duty or other significant breach of the employment contract, cf. the Working Environment Act § 15-14.

The threshold for dismissal is therefore high, and normally requires a qualified preponderance of evidence for the circumstances cited as grounds for dismissal.

In the case of a lawful dismissal, the employee is obliged to leave immediately without salary or other benefits from the employer. An unlawful dismissal can be declared invalid by the court, and the employee is then entitled to compensation.

What is termination?

Termination is a less intrusive way to end an employment relationship. An employer can only terminate an employee if it is objectively justified by circumstances related to the business, the employer, or the employee, cf. the Working Environment Act § 15-7.

The threshold for termination is lower than for dismissal, but still requires good reasons.

In the event of termination, the employee is generally entitled to work during the notice period and receive salary. The notice period is a minimum of one month, but can be longer depending on age, seniority, and the employment contract. The employee also has the right to remain in the position during a potential dispute regarding the validity of the termination.

A termination that is declared invalid results in the continuation of the employment relationship.

Key differences summarized

The key differences between dismissal and termination are:

• Dismissal requires more serious breach/duty breach than termination

• Upon dismissal, the employee leaves immediately without salary, whereas in termination the employee must work during the notice period

• The employee does not have the right to remain in the position upon dismissal, whereas the employee usually has the right to remain in the position during the notice period upon termination

• Compensation may be higher for unlawful dismissal than for unjustified termination

Conclusion

Dismissal is a much more serious reaction than termination, with immediate departure and loss of salary. The threshold is higher and consequences are greater. Termination is conducted with a notice period, salary during the notice period, and the possibility to remain in the position during a dispute. It is important for both employers and employees to know their rights when ending an employment relationship.